Does Financial Connectedness Predict Crises?

WPIEA2013267 Image
Price:  $18.00

Author/Editor: Camelia Minoiu, Chanhyun Kang, V S Subrahmanian, Anamaria Berea
Release Date: © December, 2013
ISBN : 978-1-47555-425-0
Stock #: WPIEA2013267
Stock Status: On back-order

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The global financial crisis has reignited interest in models of crisis prediction. It has also raised the question whether financial connectedness - a possible source of systemic risk - can serve as an early warning indicator of crises. In this paper we examine the ability of connectedness in the global network of financial linkages to predict systemic banking crises. Our results indicate that increases in a country's financial interconnectedness and decreases in its neighbors' connectedness are associated with a higher probability of banking crises after controlling for macroeconomic fundamentals.

More publications in this series: Working Papers

More publications by: Camelia Minoiu ; Chanhyun Kang ; V S Subrahmanian ; Anamaria Berea